BEA Systems buying would-be Microsoft competitor Crossgain

By JOHN COOK, SEATTLE POST-INTELLIGENCER REPORTER

Updated 10:00 pm, Tuesday, July 10, 2001

Crossgain Corp., the Redmond Internet start-up that scored financial backing from The Barksdale Group and was attempting to compete against Microsoft in the business software category, has been acquired by BEA Systems Inc.

Financial terms of the deal, which has yet to be finalized, were not disclosed.

Crossgain won notoriety earlier this year when about 20 employees, all of whom at one time worked at Microsoft, were fired for potentially violating non-compete agreements. Crossgain executives Adam Bosworth, Tod Nielsen and Rod Chavez, all of whom held senior positions at Microsoft, also resigned.

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San Jose, Calif.-based BEA extended offers to all 28 Crossgain employees, including company founders Bosworth and Chavez. Nielsen, the former Crossgain chief executive who is not presently working at the company, also has been extended an offer, said John Kiger, director of product marketing at BEA Systems. Crossgain employees who accept the offers will continue to work out of Redmond, where BEA will establish a branch office.

Kiger said he does not foresee any problems arising with Microsoft as a result of the purchase.

"We are acquiring the company, but in particular we are acquiring the people as opposed to any technology, products or intellectual property that might have been affected by prior relationships with Microsoft," said Kiger.

BEA, which makes business software based on the Java programming language, competes against Microsoft's .Net strategy. It has about 10,000 customers using its WebLogic platform.

Crossgain raised $10 million in venture capital from The Barksdale Group and Benchmark Capital in September. Executives could not be reached for comment.